Clarity Act's 'Clarity' Looks Foggy: TD Cowen Gives It a Whopping 33% Chance

The Clarity Act—the crypto market structure bill that's been collecting dust in the U.S. Senate—has about as much chance of passing this year as Bitcoin hitting $1 million tomorrow. At least according to TD Cowen. Spoiler alert: it's not happening. The bill is basically the Web3 equivalent of that gym membership you swore you'd use—lots of promises, zero results, and a mounting sense of regret.

Investment bank TD Cowen's Washington Research Group is 'increasingly pessimistic' about the bill's prospects. Managing director Jaret Seiberg put the odds at a chilly one-in-three for the Senate to advance a version that the House will actually pass. For those doing the math at home, that's a 33.3% chance, which is roughly the same probability your altcoin portfolio finishes the year green. Ouch.

The recent stablecoin yield compromise? Not enough to move the needle, Seiberg said in a Monday note. Under the proposal, companies couldn't offer yield on idle stablecoin balances but could still dole out activity-based rewards. That's apparently not the silver bullet lawmakers were hoping for. It's the regulatory equivalent of putting lipstick on a pig and calling it a beauty queen—technically different, still a pig.

Even Sen. Mark Warner—historically a crypto optimist—has curbed his enthusiasm. He's now sitting at 50% to 60% odds, down from a previously rosy 80%. That's a 20-30% drop in optimism, which is basically the emotional journey of holding a memecoin through a tweet from Elon. One minute you're diamond hands, the next you're questioning every life decision that led you to this point.

The stablecoin compromise, pushed by Sens. Thom Tillis and Angela Alsobrooks, has been discussed before. It might not satisfy anyone. Coinbase likely objects because it discourages using stablecoins as an investment vehicle for excess liquidity. Banks aren't thrilled either since it gives crypto platforms an incentive to push stablecoins for everyday purchases—aka a 'real threat to core deposits.' It's the perfect regulatory sandwich: annoying both sides while somehow satisfying nobody. A true congressional masterpiece.

Seiberg thinks the only path forward is Congress ignoring objections from both Coinbase and banks and just passing the thing anyway. That's possible, he says, but rare—which is exactly why he remains pessimistic. Imagine trying to get your group chat to agree on dinner plans, but the dinner is legislation and everyone's actively mad. That's Washington on a good day.